Bitcoin reached a new all-time high of almost $70,000 on Tuesday, then lost more than 10% amid heavy selling on crypto exchanges, which sent the price below $60,000 at one point. Data from Binance showed massive sell orders accumulated at higher price levels. More than 300 BTC were sold at $69,000 each, and around 500 BTC were sold at $70,000 each.
Bitcoin lost over $1,000 in just one minute after hitting its all-time high of $69,208. The mass sell-off happened in series. First, the price fell below $65,000, then even more to $59,700. It is currently trading for around $65,000.
Bitcoin’s decline amounts to around 7% over the past 24 hours, which is more than the overall market decline of 3% based on the CoinDesk 20 Index. Solana and Ethereum performed relatively well, holding the market up. Other leading altcoins like Dogecoin, Cardano, and Shiba Inu lost 11% on average.
Leverage wipeout
The volatility provoked a substantial leverage wipeout, with derivatives trading positions worth over $1.1 billion liquidated in the past 24 hours, according to CoinGlass data. The vast majority of these positions – $870 million – were long positions, which are bets that digital asset prices will increase.
Positions are liquidated when an exchange closes them because the user’s initial money (margin) is partially or completely lost, and his funds aren’t sufficient to cover the loss. When an asset declines in value, it can have a domino effect, exacerbating price declines and losses. Major liquidations frequently mark a lower or upper limit of the asset’s price.
Analogical past events
The most recent price developments surpassed last August’s volatility, when positions worth $1 billion were liquidated, and Bitcoin suddenly lost $3,000, down to $25,000 from $28,000. The move marked a lower price limit, and it took Bitcoin a few weeks to start climbing again.
Bitcoin performed similarly around November 2020, when bulls were expecting it to break $20,000. Instead, the flagship crypto lost $4,000 quickly, dropping to around $16,000.
The market awaits a Fed decision
Another factor in Bitcoin’s sharp decline could involve bearish sentiment in the US. Investors are worried about the Federal Reserve’s next rate decision. Chairman Jerome Powell is expected to announce it in a message to the US Congress later this week.
Either way, there’s no shortage of Bitcoin bulls who are expecting the cryptocurrency to resume its climb. They draw attention to its astounding surge after it crashed in 2022, in part due to the collapse of FTX after a deposit run and the implosion of Three Arrows Capital, the crypto-focused hedge fund. Bitcoin was trading for just $16,000 when FTX filed for bankruptcy in November 2022. This wasn’t the only factor, as it started to lose value soon after reaching its then-ATH of $68,900.
Bitcoin ETFs and halving
Bitcoin has regained momentum this year thanks to a decision by the US SEC, which allowed investors to move into the asset more easily. With the approval of spot Bitcoin ETFs, traders can buy and sell Bitcoin similarly to stocks. Bitcoin trading is no longer limited to crypto exchanges, which can charge excessive transaction fees.
Another factor behind Bitcoin’s latest surge is the halving in April. Bitcoin bulls expect the price to keep rising as the supply of Bitcoin becomes more limited.
Correlation to gold and stock market
However, critics find that Bitcoin’s price growth reflects overall market sentiment. This year, investor confidence pushed the US stock market to a series of fresh records. The Crypto Feed and Greed Index was 90 out of 100 on Tuesday. This means Extreme Greed in terms of industry sentiment.
Index analysts point out that gold surged to new highs Tuesday evening, which is highly significant as well. The main reason for this is the activity of Chinese investors, who are turning to gold as a refuge after the steep declines in the Chinese stock and property markets.
According to critics, the net buying of Bitcoin is mainly taking place on Binance, an offshore exchange, which indicates that buying activity outside the US is driving the cryptocurrency’s spectacular price growth.
In November 2023, Binance founder Changpeng Zhao stepped down as CEO of the exchange and pled guilty to violating US anti-money-laundering regulations. The exchange paid an industry-first $4.3 billion fine to be allowed to keep operating.
